Бухучет и статистика в народном хозяйстве

The phenomenon of indicative prices in the art market: testing the economic and statistical hypothesis

Authors: Kolycheva V. A.

Abstract

The concept of an indicative evaluation is known in one or another way, perhaps for all, without exception, trade transactions. A situation when the distinctive properties of a good are transferred, including through a special price set on it, with varying degrees of frequency can appear in the car market and in the bread market. Nevertheless, for both called platforms the demonstration evaluation will act as only one of the possible techniques of the realization. It seems that there is a market for which the establishment of a “correct” price is a fundamental, if not the only effective, functioning strategy. The present article represents a description of the results of the economic and statistical test hypotheses about the legitimacy of attributing a monetary value of the artworks as an independent ranking of their importance. About the validity of this hypothesis tell at least two positions. Firstly, it is an objective complexity of an interpretation of the “aesthetic value” category; despite the huge reservoir of expertise of the Humanities, often a specific price (banal: expensive/ cheap) becomes the final argument in favor of a higher or lower value of a single monument. Secondly, it is the first cost of an artwork, otherwise the cost of the appearance on the art platform, which plays a vital role in its further market destiny. Bidders put a tacit equality between monetary and art non-recognition; only time (often measured in centuries) can change such an error verdict. Objectives. The aim of the current study is focused on the study of the most disputed art process – the pricing – through the prism of an indicative evaluation. Methods. The research involves methods of economic and statistical analysis (analysis of groups, variation and factor analysis, z-score). Results. The variance of the average period of the ownership of an art work is due to its price by 31.76%; the remaining 68.24% depend on the cumulative impact of unaccounted reasons. For the average repeat sale price of an art work, these shares are divided as follows: 58.58% – factor and 41.42% – case; for the average annual effective rate of return: 93.77% and 6.23%. Consequently, the price of the initial sale of an art work significantly affects the average period of ownership (correlation ratio is 0.56), strongly affects the repeat sale price (0.77) and almost completely determines the average annual effective rate of return (0.97). Conclusions and Relevance. It is concluded that the establishment of the indicative prices for the art works, which act as an indicator of the quality of the traded goods for the participants, is a fundamental and distinctive strategy of the art market functioning.

Key Words

artworks, indicative prices, economic and statistical analysis, group analysis, factor analysis, z-score, financial and investment potential